Tuesday in the charts.
Signs of exuberance.
Madness of the crowds.
Weekly mortgage applications fell 1.9% while purchase applications were up 7.2%.
December German PPI was +0.8% versus estimates of +0.3%; UK CPI was +0.3% versus +0.2%, core CPI was +0.3% versus +0.2%; EU CPI was +0.3%, in line.
The economy’s growth obsession.
Consistency about elasticities.
Yellen to congress: go big. As you know, one of my thesis for lo these many years is that passed a certain level (Rogoff and Reinhart says 90%) the national debt/GDP ratio has proven to inhibit economic growth. The reason is simple---we have to spend so much money servicing the debt that it limits the amount that can be used to invest in increased productivity (i.e., economic growth). Well, the US is will beyond the 90% level and it appears that with the ‘go big’ agenda it is only going to get higher; and, therefore, pose an even greater burden on the economy. To be fair, whatever portion of the new ‘go big’ program is for infrastructure (productivity enhancing projects) that is a positive for growth. But as I read the list of proposed expenditures, productivity enhancing projects are in woefully short supply. The bottom line being while a new infusion of cash into the economy may get investors jiggy in the short term, longer term it just provides further support for the thesis of higher debt = lower growth.
Problems with the pandemic relief bill.
Increasing income tax progressivity may increase growth.
Bottom line. Be cautious with small cap stocks.
An actual bubble is unmissable.
Where Wall Street thinks the biggest bubbles are.
Know your risk management.
News on Stocks in Our Portfolios
Fastenal declares $0.28/share quarterly dividend, 12% increase from prior dividend of $0.25.
What I am reading today
The monopoly power of Facebook and Google.
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